Agriculture Cabinet Secretary Mutahi Kagwe wants savings and credit cooperative societies (SACCOs) to take the lead in providing affordable loans to farmers and young people venturing into agribusiness.
Kagwe says young farmers and agricultural businesses cannot grow if they are forced to borrow at high interest rates, insisting that any financing programme targeting the sector should offer loans at single-digit rates.
He made the remarks during a meeting with officials from the African Development Bank (AfDB) and the Ministry of Agriculture, where they reviewed the progress of several agricultural programmes supported by the bank.
“Why are we ignoring the biggest asset in financing in this country that we can use? SACCOs,” Kagwe asked.
He added that lending to farmers at interest rates above single digits would defeat the purpose of making agricultural financing accessible.
“Anything that is not a single digit interest rate is a waste of time,” he said.
One of the programmes discussed was the Empowering Novel Business led Employment (ENABLE Youth) initiative, which has set aside KSh2.2 billion for lending in its next phase.
Under the proposed arrangement, SACCOs are expected to be the main channel through which young people access the loans. Other participating financial institutions will also be involved.
The programme further seeks to unlock an additional KSh60 billion for young people and women through risk-sharing arrangements with financial institutions.
Kagwe said the focus should not simply be on giving out loans but on finding businesses with potential and helping them grow.
He pointed to the NYOTA Programme as an example of an approach that supports businesses already established by young people and helps them expand.
“It’s a demand for business, not a demand for money,” he said.
The CS called on the Ministries of Agriculture and Cooperatives to work together with SACCOs to identify viable agricultural businesses that can benefit from the financing.
The meeting also reviewed two other AfDB-supported programmes: the KSh5.4 billion Building Resilience for Food and Nutrition Security (BREFONS) Programme and a newly secured USD20 million grant for the Building Resilience for Food and Livelihoods (BREFOL) initiative.
BREFONS is currently reaching about one million people against a target of 1.9 million in seven counties: Baringo, Garissa, Isiolo, Marsabit, Samburu, Turkana and West Pokot.
The programme supports water infrastructure, livestock production, market access, climate resilience and local value addition in the counties.
Under ENABLE Youth, eight Youth Agripreneurship Incubation Centres have been rehabilitated and equipped, while 1,500 young people have been recruited into the programme and taken through incubation.
Another 1,000 have received support to prepare business plans that can help them secure financing.
Kagwe urged the teams implementing the programmes to speed up their work while maintaining accountability and proper use of funds.
The meeting was attended by AfDB officials, representatives of the Agricultural Finance Corporation and Ministry of Agriculture project coordinators.